Robert Skidelsky, Professor Emeritus of Political Economy at Warwick University and a fellow of the British Academy in history and economics, is a member of the British House of Lords. The author of a three-volume biography of John Maynard Keynes, he began his political career in the Labour party, became the Conservative Party’s spokesman for Treasury affairs in the House of Lords, and was eventually forced out of the Conservative Party for his opposition to NATO’s intervention in Kosovo in 1999.

Mr Skidelski what is equality? We are all equal before the law and that is important. It is obvious that the recent wealth inequality is hugely driven by QE, which in turn ended up in a huge stock market rally, if stocks go up inequality increases because only a few people own stocks. I think equality should not be a target. More important indicators should be the level of poverty, unemployment and so on. If you follow the philosophy of making every one equal you are endorsing communism, which turned to e be a total disaster with massive poverty and totalitarian states. I come from a country where communism was in power for 50 years, with one of the ruthless dictatorships ever. And believe me inequality is much better than equality.

This idea was introduced by Professor Duesenberry in the late 1940's. Sadly, the alternative of the only self-regarding individual became the mainstream impacting most of the economic research and analysis. This only suggests retaking these ideas and reevaluate our analysis.

The median family income in the us has hardly risen over the past decades. That is true. But the size of this family has fallen too. In addition, high wage earners are now more often married to other high wage earners than before and since there are more singles now, richer people share less of their income with people with smaller earnings. Don't forget the effect of immigration. The us has absorbed more immigrants than any other industrialized country. This causes a growth of the number of people in the lowest income brackets. As a result, everybody's income can increase while the median remains steady. Equality does matter but I'd call some economists like this author, Krugman, Stiglitz,.... not to use the subject to advance a political agenda.

I fail to see how increased levels of equality would lead to more security -except if contributed to ending poverty and envy and thus theft and financial crime- or to better health -except if it contributed to ending envy and thus mental health- or to more leisure and time with family and friends or to more respect from one's fellows and to more lifestyle choices -except if it contributed to not only ending poverty but people's desire to have more and actually to increased wealth... More important than more equality is less extreme poverty and less poverty in absolute terms. Envy is a moral matter and can be dealt with separately. On the other hand, without a natural level of inequality, as in the case of the natural level sof inflation and unemployment, the spark that lights the fuel of inventiveness, productivity, and competition would die out and social and political development, not just economic, that would enable true well-being, would cease. We would all be Eloi, locked into a static world of fantastic equality, without any Morlocks to feed us; only to eat us.

One incredibly rich source of information and insight about this subject is the documentary "Happy," directed by Rokyo Belic.
The film explores the emerging 'science of happiness' in interviews with leading researches in the social and physical sciences. Their findings are brought to light through encounters with some of the happiest - and unhappiest - people in the world.
There's a great discussion of the film and it's discoveries here: http://greatergood.berkeley.edu/article/item/the_science_of_happiness_coming_soon_to_a_theater_near_you/
The documentary's website is: http://www.thehappymovie.com/

Ultimately, I buy the argument that economic growth as defined by percentage change in GDP/GNP is only a means to something more fundamental: the well-being and welfare of the greatest number of people possible within a given polity. Growth serves happiness or the pursuit thereof; therefore, happiness is a much more apt metric to determine the success, or lack thereof, of a political economic system. Shouldn't societies target "net" or "median" happiness? And if we believe this, how should we go about it? Programs and policies that promote a balance between economic fairness, equality and innovation would seem to be a good start in my humble opinion.

There are still 5 Billion people living in poverty. Without significant quantitative economic growth, they are doomed.
Those who oppose grow are indifferent to the suffering of the world's poorest people.

I will believe the king of Bhutan is sincere when he gives all his money to the poor and abdicates. Otherwise, it looks like just another load of hypocricy.
Everyone wants more equality and higher taxes - as long as other people pay the price.

Thank you for this line; "No doubt this mood will pass when growth revives, as it is bound to."

I laughed out loud. Great shot!

However, quite aside from entertaining, I believe your article is profound and it may indeed be a fortuitous turn of events which have conspired to cause us all to consider our relative happiness.

(It is always worthwhile to take some time to ponder, after the storm)

In the mindless 'rat-race' as it has been called, the drive to get more 'things' how many Westerners have become happier?

Well, the 1% are certainly happier! Possibly the top 20%, but the rest are worse off qualitatively and quantitatively. And they know it.

For example, does it matter that a person drives a Toyota Corolla? Not really, they are reliable and safe cars by all accounts. But when the neighbour down the street races past every day with his brand-new Ferrari, then it does matter.

From that point on, it is all psychology.

The Ferrari driver feels justified and imagines he has earned the right. While the neighbours wonder if he got that money by being a drug-dealer, a Wall St. banker, a corporate welfare bum, a ponzi-schemer or other fraud artist.

At some point, there WILL be a confrontation. And one side will blurt out something along the lines of; "Well, let them eat cake." while the other side will likely retort with "Off with his head."

Even the most cursory reading of history proves this to be true. So many times, capital accrues at the top often with the assistance of plutocrats, or industry-specific interests (the Robber Barons, for one example) which further enrages the electorate.

If things go too far -- plutocracy results, setting the stage for revolution at some point in the future.

Perhaps a hard turn towards personal happiness by governments, NGO's and individuals, would be the best for our Western societies. It seems to be lacking at the moment.

From my point of view, a much more robust set of checks and balances for governments and business, would accomplish much and complement efforts towards personal happiness and personal accountability.

We are just a little of course for now. If we don't correct course now, eventually we will arrive at a point of no return.

Let's hope that the measure of happiness can become an important part of the national commitment.

Professor Skidelsky, it is hardly a new emphasis. It was put forth by Bhutan's king - in 1972 - long before I was born. It has been measured since by Bhutan, and continues to be measured; it can hardly be termed a passing fad or a mood that will pass. It is also not suggested as an alternative to GNP or GDP, but as an additional tool to measure a country's progress.

I have been reading this pathetically, zealously pro-capitalist site for some time now, and this is one of the two or three good articles I have seen. So many mainstream economics writers forget that economics is a subset of politics. What type of economy you want depends on what you think an economy is supposed to achieve. This is a basic political question. GROWTH, GROWTH, GROWTH; FREE TRADE, DEREGULATION, LOWER TAXES, ENTREPENEURSHIP, FLEXIBILITY IN LABOR MARKETS; BLAH, BLAH, BLAH.

The result of three decades of capitalist religion is a very unequal, largely poor, and quite unhappy Amerika. Those who work do so more productively and see an increasingly smaller share of the gains.

Let's suppose that Aristotle is right, that happiness is a complete life. It is the end of all our activities and is self-sufficient. It depends upon having basic needs met, developing practical wisdom, and enjoying the leisure for friendship, family, higher culture, and philosophical reflection. Well, a ceaseless drive for more material wealth grants you none of the above and an increasingly oligarchical government that can focus only on even more unequal growth.

Having witnessed the highest level of poverty in Western Odisha, in India (which has much lower per capita GDP than Somalia), I think the debate on happiness needs to shift to general well being of the people who deserve better as happiness is meaningless to people whose only access to running water is the river and devoid of any basic amenities that life offers them what usefulness does being unhappy bring to them? If happiness is measured in the delta change that life offers, in a situation where the delta is constantly missing, the depth of the depravity makes happiness seem an unknown word.

The situation is more simple than we think.
We forgot who we are. We are not some special aliens, disconnected from the rest of living creatures or the natural system we live in, but we are part of it.
We still belong to the group of mammals, our body does not differ from other sophisticated mammals apart from small differences, our whole body and even the psyche is working based on the same laws and principles.
And what we call "happiness" in biological terms is an overall balance, homeostasis within the actual ecosystem, and in our case this ecosystem exists within a human being, within human society and between human society and the rest of the vast natural system surrounding us.
Happiness, the feeling of balance, the ease we can settle in life depends on how optimally we take part in the system with harmony.
The constant quantitative growth lifestyle we stubbornly pressing despite it obviously collapsing is unnatural, it is going completely against all the natural laws around us.
We behave like cancer within the natural system.
Despite what the article claims that growth is bound to return, it is simply impossible, since the laws around us are bounding, they are unbreakable, and if the human species is planning to survive, carry on with the evolutionary process, we have to adapt to the system instead of trying to bend it to our own selfish and greedy desires.
We do not stand a chance, as the awesome natural forces during natural catastrophes show us we are no match for them, nature around us will not change, only we can.

Growth is indeed bound to return, but exactly that -- it is the boundary conditions that will determine it and these are beginning to form a steel wall of limits. Under those boundary conditions, the only way to grow will be inward -- and into each other.

It is the new Humanity to born from this cocoon that will takes its rightful place in Nature as a new organic whole. This is the one that will know healthy growth. No ego cancers -- individual, oligarchical, or masses. Rather a unified whole that will work as one even with the environment itself.

Nature repeats this scenario over and over again -- with species that make it. I like to think that we will yet truly prove the great success story of Nature...

Why is it that people assume that because one person is at a higher position and makes a lot of money, then they cannot be replaced? Most likely, there is someone "within their 10 employees" (returning to G. A. Pakela's example) capable of taking over.

Truth is that we are at an age in which fools can be kings. I can easily find a thousand recently graduated MBA's who would be better presidential candidates than Santorum or Cain were. These two were by many standard easily replaceable, yet they are wealthy and influential.

And it applies to many more cases than just politics. What are the chances that no single person under a multinational company is better prepared and more intelligent than the CEO of the same company? On pure probability and objectively looking at the numbers (thousands of employees including PHD's), chances are slim.

So if these millionaires don't have the power of scarcity to justify their positions and wages, then what is it?

Here is a thought experiment to test your hypothesis that only relative and not absolute levels of wealth matter. Would you prefer to live in the world of 1950 America or the world today? Yes we were much more equal but much poorer. Knowing that you gave up all that wealth, by returning to that poorer reality, would make you much less happy.
The reason you have such weird results in studies on the this question is not because people actually have the perverse utility functions you posit ("I'd rather live to 50 instead of 80 so long as you die with me"), but because they lack key information.
Asking a person from Bhutan with income of $5,000 per year if they are as happy as an American with $40,000 per year is not a test of relative happiness . It is a test of relative ignorance. If neither 'knows' about the life of the other, especially the Bhutan, it is not surprising that they will be 'happy' with their lot. They can't really imagine what they don't have.
The fact that perceptions of happiness change so dramatically when you lift this veil of ignorance (pun intended) , as in unequal societies, is because people have much more knowledge of what they don't have and they want it.
And, to be a bit cold blooded about it, their wanting it drives them to demand more and produce more, which occasionally leads to desirable things beyond Hermes and Bentleys like a cure of cancer.
In this sense, reasonable inequality with the opportunity to move between classes is of enormous benefit to progress as a whole.

I don't believe people were fundamentally poorer because of increased equality in the 1950s. I also think it's somewhat of a false dichotomy to pit 1950s equality against today's wealth. The 1950s (the immediate post-war era) was one stage in the development of the "West". More so you cannot compare our advances in technology with what people had back in the first half of the 20th Century. We should be concerned with why we couldn't maintain said equality and still have sufficient economic growth.

Inequality is fundamentally about knowledge thereof. We may all be dirt poor, primitive and ignorant relative to some pan-galactic super-civilisation, but this does not affect our happiness one whit. Instead, we evaluate ourselves relative to what we could realistically achieve. The unhappiness generated by inequality is in the gap between what we have and what we have seen others as having – social standing and power (which become major concerns once we are warm, safe, and fed) are zero sum. How much can you unilaterally influence my life or how much can I unilaterally influence yours.

I submit that in your example of 10 people, 9 workers who earn $10 K and a manager who earns $150 K, the level of unhappiness would be greater if the business and the $150 K manager didn't exist, and the other 9 found themselves unemployed.

Of course, you might point out that the 9 might be just as satified to be on the public dole, but the rest of the population that has to be taxed to support them is made unhappier than they would be if their tax rates were more reasonable!

In comparing two situations, you cannot disappear some things but not associated others. If the manager were to disappear, would the business's productive assets disappear with him or would they be distributed to the other 9. If the latter, I strongly suspect that they would not be more unhappy (and form some business on their own). If the former, then it is the disappearance of assets that they previously knew were there that would be lamented.

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